Cenvat credit of Service tax paid on import of services — Clarifications - Service Tax - 21/JAM/2008

Commissioner of Central Excise Service Tax, Jamshedpur Trade Notice No. 21/JAM/2008 (S. Tax) dated 6-8-2008 Attention of Trade and Industry and all concerned is invited to the TRU s letter F. No. 345/1/2008-TRU dated 27-6-2008 on the subject mentioned above. Board vide para 4.2.13 of letter F. No. B1/4/2006 dated 19-4-06 clarified the admissibility of Cenvat credit of service tax paid under section 66A on the taxable services provided from outside India and received in India and used as input services for the taxable outputs, as follows : 4.2.13 The treatment of the recipient of service, as the deemed service provider under Section 66A is only for the purpose of charging service tax on taxable services received from outside the country. Services provided from outside India and received in India, therefore, not treated as taxable service provided by the recipient for the purpose of Cenvat Credit Rules, 2004 . However, where such service is used as an input for providing any taxable output, the service tax paid on such service can be taken as input credit. 2. It has been brought to the notice of the Board by trade and industry associations that a view contrary to the said explanation has been expressed by field formations in certain cases. 3. Section 66 is the charging section and provides lor levy of service tax on taxable services referred to in sub-clauses of clause (105) of section 65 . Services, specified in clause (105) of Section 65 , provided by a person located in a country other than India and received by a person located in India, is treated as per section 66A , - as taxable services for the purpose of levy of service tax in India; as if the recipient of the service had himself provided the said services in India extends all the provisions of Chapter V of the Finance Act, 1994 on such services provided from a country other than India and received in India; and the recipient of such taxable services is required to be registered as a person liable to pay service tax. 4. The recipient of the service is required to pay service tax under section 66A through the service is actually provided not by the recipient but by a person located in a country other than India. Such taxable services, not being actually provided by the person liable to pay service tax, are not treated as out put services for the purpose of Cenvat Credit Rules, 2004 . However, service tax paid under Section 66A is available as input credit under Cenvat Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service. 5. The views communicated by the Board in Para 4.2.13 of F.No. B1/4/2006-TRU dated 19th April, 2006 are reiterated. 6. All Trade Associations/Chambers of Commerce, members of RAC (both organized and SSI) falling within the jurisdiction of the Commissionerate of Central Excise, Jamshedpur are requested to bring the contents of this trade notice to the notice of their constituent members and others concerned.